Business liability insurance is getting more and more expensive partly due to ever-higher jury damage awards and third-party litigation funding. This is the main finding of a new report from insurer Chubb.
Despite the trend, companies are “underestimating the amount of liability coverage they need,” the insurer writes.
Across all forms of construction, average insurance limits purchased in 2023 (the maximum payout) were 44% lower than those purchased in 2014.
The industry classifies any jury damage award over $10 million as a nuclear verdict. One of the largest last year involved a fatal collapse of a Texas tower crane in 2019 with a jury award of $860 million.
Chubb reports the limits of liability and large losses each year so companies can build insurance “towers” — umbrella and excess insurance policies that kick in when general liability policy limits are exhausted.
Opaque funding from third-party investors seeking a share of plaintiffs’ recoveries continues to rise, Chubb says. The insurer wrote that the market for such cases was valued at $18.2 billion by 2022 and is expected to grow steadily, according to industry research.
